Great Florida shrinks ranks of directors
By Jim Freer
Friday, January 19, 2007
Joe Lacher, at the time Great Florida’s chairman, celebrates the bank’s new Broward County headquarters last year with CEO Mehdi Ghomeshi, who recently has replaced him as chairman.
Three Great Florida Bank directors - including Joseph Lacher, its founding chairman and previously Bell South president for South Florida - have quietly left the Miami-based bank.
In a Form 8-K filing dated Dec. 22, Great Florida told the SEC, the Federal Deposit Insurance Corp. and the Florida Division of Financial Institutions that Lacher; Susana Ibargüen, a member of several charitable foundations and a former banker; and Mitchell Mandler, a partner in the Miami office of law firm Becker & Poliakoff, resigned from its board on Dec. 20.
Other than that filing, which none of the three regulators had yet to post on their Web sites, Great Florida (OTCBB: GFLBA) did not release any press releases or other notices of the resignations. As of Jan. 16, the bank had not included the filing in the investor relations section of its Web site. That raises the question of why Great Florida, which has gained publicity partly because of its high-profile board, did not make a wider effort to let shareholders and customers know of the change.
Great Florida President and CEO Mehdi Ghomeshi said the bank followed its routine practice of filing an 8-K regarding board and management changes, and that all three directors had no disagreements with the bank's management.
Ghomeshi succeeded Lacher as board chairman and retained the title of executive chairman.
The directors resigned because they indicated they would not be able to attend their minimum required meetings in 2007, said Ghomeshi, who was president of Coral Gables-based BankUnited (NASDAQ: BKUNA) from 1998 through 2002.
Directors of Florida-chartered banks are required to attend at least 75 percent of the aggregate number of board meetings and meetings of their committees.
More board cuts possible
Great Florida will not replace the directors and is considering further reduction of its board, now with 10 members. It might take that step partly because of what Ghomeshi called informal suggestions by some state regulators to have a smaller and more manageable board.
The loss of the three directors "will take away from potential name recognition and the business they brought in, especially Joe Lacher," said Ken Thomas, president of Miami-based consulting firm BranchLocation.com. Thomas said he is a Great Florida shareholder, but "not a large one."
"As a stockholder, I would like a better explanation on why this happened," said Thomas, who was not aware of the resignations until informed by The Business Journal.
Great Florida will note the resignations in its fourth quarter report to shareholders, Ghomeshi said.
Lacher and Mandler each said they had no disagreements with Great Florida management. Lacher said he resigned for personal reasons, including spending more time with his family. Mandler also said he resigned for personal reasons.
Ibargüen could not be reached for comment. She is a trustee of the Miami Art Museum. Her husband is, Alberto Ibargüen, the former publisher of The Miami Herald.
The trio had been Great Florida board members since 2004, when the bank opened with $60 million in capital, then the record for a Florida chartered start-up bank. The bank raised an additional $108 million in private capital in 2005.
Lacher and Mandler declined to comment on Great Florida's efforts to comply with a cease & desist order, which the FDIC placed it under on Nov. 17 for what that regulator said were unsafe and unsound banking practices and alleged violations of the Bank Secrecy Act. The FDIC did not issue any fines.
The order "had nothing to do" with the directors resigning, Ghomeshi said. "I am confident that we will make the targets [for changes in BSA compliance mandated by the FDIC]."
In a Dec. 28 memo to FDIC and the Florida Division of Financial Institutions, Ghomeshi wrote: "It is expected this will improve efficiency and enhance board oversight of the bank. We anticipate during the first quarter of '07, the board will be further reduced."
Suggestion by regulators?
Ghomeshi told The Business Journal that, in "very informal conversations," state bank examiners had told him that most banks of Great Florida's age had fewer directors.
"I kept that in the back of my mind," he said.
If Great Florida makes other board reductions, it will announce them at its annual meeting in April, for which the date is not set.
Linda Townsend, a bureau chief for the Florida Division of Financial Institutions, said she does not recall telling Great Florida that it should reduce the size of its board.
"I have never suggested that to a bank, and I do not recall anyone else here ever doing that," said Townsend, who has been a Florida bank regulator since the mid-1970s.
"If anything, some of our examiners or FDIC examiners might have told them they might want more directors who have more time for the board," she added. "We never ask a bank to get rid of a director unless there was a problem. That was not the case here."
FDIC policy does not permit it to comment on Great Florida's C&D order or board change, agency spokesman David Barr said.
State regulators also will receive Great Florida's reports on compliance with that order.
"We have not received any full reports yet," Townsend said. "But based on talks we had with the bank in December, I think everything is going in the right direction."
Great Florida had $1.4 billion in assets on Sept. 30. The bank reported net income of $751,000 for last year's first nine months. Its Web site shows it has 19 branches, all in South Florida.
Great Florida plans to add six offices in the first quarter. It filed those applications prior to the issuance of the C&D order.
The order did not prohibit Great Florida from applying for more branches, but regulators usually do not approve new branch requests for banks under C&Ds.
"We have not filed any applications [since the C&D]," Ghomeshi said.
Great Florida continues to be active in most types of real estate lending, except loans to developers of high-rise condos, he said. As of Sept. 30, the bank had no non-current loans.
New York-based Elliott Management Corp, with 14.6 percent of Great Florida's Class A shares, was the bank's largest outside shareholder on Feb. 28, the last day for which that data is available.
Sundar Srinivasn, a portfolio manager for Elliott, declined comment on Great Florida's board changes and C&D order.
"I think the bank remains a very strong investment," Lacher said.
"Mehdi has 100 percent of my support," Mandler said.
Lacher and Mandler remain Great Florida shareholders and depositors.
Great Florida issued start-up stock at $10 a share and its follow-up stock at $16 a share. The lightly traded stock closed at $18.75 on Jan. 16.
The bank's smaller board includes some well-known South Floridians, including former state Sen. Daryl Jones, president of consulting firm D.L. Jones & Associates; Donald Slesnick, Coral Gables mayor and a partner in law firm Slesnick & Casey; and Leslie Pantin Jr., the bank's vice chairman, who is president of public relations firm Pantin/Beber Silverstein.
GREAT FLORIDA BANK
Web site: www.greatfloridabank.com
Address: 2 S. Biscayne Blvd., Suite 110, Miami 33131
Phone: (305) 514-6400
E-mail banking, finance and insurance writer Jim Freer at email@example.com.
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